Efficient management of a business supply chain is important for any business involved with sales of goods or services. While local automated inventory management by computer has been widely adopted, to properly manage inventory, businesses keep track of inventory count, maintain a sufficient amount of inventory on stock, and timely re-stock an appropriate amount of inventory in transactions between what may be large numbers of counterparties with separate computing devices for inventory management, sales, and supply chain communication. For many businesses, it is difficult to maintain enough inventory on hand to satisfactorily fulfill customers' orders without over-stocking. A delicate balance is necessary to avoid over-stocking, which poses many risks such as tying up funds and incurring maintenance costs, including storage space expense, spoilage and damage, and depreciation of inventory value. This is even more of an issue for small businesses which may not be able to afford the expense of a complex custom supply chain management system that may be used by larger competitors.
Complicating a business's ability to manage such operational resources is that demands may fluctuate for a variety of reasons. Complications may include changes in customer behavior that are a result from seasonal demands, such as holidays. An example of a seasonal demand is the increase in demands for certain consumer products during Christmas or other similar holidays associated with gifts. Similar to seasonal effects, the business may decide to act in a way that influences customer behavior. For example, a business may provide incentives for customers to purchase its goods or services. Such incentives may include sales, coupons, promotions, advertisements and marketing, or any other incentives. Conversely, a business can act in a way that reduces demand for its products or services. For example, a business may raise prices or eliminate promotions or specials. In any of these ways, customer behavior may be affected in a fashion that the business managers cannot adequately predict. Such may be the case where the business lacks proper historical data to use as a basis for an accurate estimate. A business may lack sufficient historical data when, for example, it takes a business action (e.g., initiate a coupon campaign or releases a new product) for a first time or the business is a new business.
Additionally, small businesses typically lack the resources to prepare for supply chain disruptions that may be caused when supplies are not available. This may cause a small business to either overstock products and lose money by wasting space and money on unneeded supply, or alternatively to lose sales when products for sale run out, and the merchant must wait for new product to be delivered, during which time sales may be lost.